In the present seed funding market, you might have heard some contradictory refrains. There seems to be always a never ending number of the seed funds, covering up the market these days. Every week, you will come to see new firms popping up here and there, and whenever funding round is well announced, the cap table becomes full of so many unfamiliar names. Despite this fact, you might often hear that raising seed rounds is rather difficult, mainly for the first time founders. Entrepreneurs will always lament on how much effort and time it has taken to raise seed round, even in what might seem to be a capital rich environment.
Now the main question is how you can reconcile this structure. What is believed to have been working around here is although most Angles and funds are happy to just pile into rounds that are coming together most of them do not want to lead these current rounds. It always turns out unsurprisingly that the followers are many but there are few leads in the market.
The points actually going into leading seed round:
Part of this structure is mainly mechanics of putting into actual financing together. This service will include working with the founders to determine proper valuation.
It is also used for negotiating other substantive terms of the said round and typically writing one of largest checks over here. But above the moral important terms of the check or the term sheet, you have moral authority and responsibility of constructing independent forms of convictions, which can otherwise work as catalyst for rest of the round. You will come to learn more about the seed based funding market straight from liberty lending USA for sure.
- Apart from taking down the current leadership role, there are some burdens of some explicit responsibilities to cater to. This section will often involve dong majority of the due diligence and even helping out to construct rest of round syndicate. It will take hold of the potential series seed based board seat. At the end of it all, it is about acting as representative for preferred shareholders as less involved.
- It can end up being a hell lot of work, mainly when things are going sideways during critical junctures for company. Most of the seed investors actually do not have the capability or capacity of handling this task that well.
- You can partner up with seed firms, which can lead towards most of the rounds. Being in a partnership will help you gain experience with the fact that number of funds that actively lead are fewer than total number of funds that you see published on multiple industry lists.
- Well, quantifying difference turns out to be quite difficult as the information is not quite available readily and data also seems to be fairly incomplete. You can decide in running own analysis for trying to get directional sense of what the seed funding landscape looks like from the current perspective for those founders, searching for the lead investors. The results would turn out to be quite interesting.
Perfect analysis of the seed VC landscape:
You can head start the analysis with list of seed focusing on VC funds, at First Republic Bank. As this list only comprises of funds which are $100M or even less than that, you can always add handful of groups that you know can exclusively work as seed focused but will invest out larger fund.
After that, you need to cross reference the list with Crunchbase data for determining active groups and those with frequent leads. As the data remains imperfect and as companies are planning to delay announcements of seed rounds, the team intentionally made the definition quite board around here.
- For the said analysis, you can consider a fund called Active Lead Investor if they were mostly designated as lead investor in seed round for around 2 firms since beginning of 2017.
- Despite such a low bar for the lead investor, you can found out that more than 600 seed funds are there on the list, around which, only 102 fit criteria as lead.
- It is always a much smaller minatory of the seed VC platform, but still substantial number of investors around here for the plans.
- In case you are one such founder raising seed round, the total investor numbers nationally are not that relevant. Here, geography plays a pivotal role. One easy way to slice this is by location of the headquarters of the funds. Depending on same dataset there are around 102 firms distributed in geographies.
Experience to deal with:
Experience is that best founders tend to attend strongest investors regardless of geography. On the other hand, most of these best investors will have multiple offices or can lead rounds in various major metros. What is more important in this regard is where the VC fund is active. It is not just associated with the place where headquarters are located primarily.
- Conversely, they have found out that most of these funds in non-core technical markets are largely regional in nature. They mainly lead to loads of rounds as they are main or just venture capital source in market. However, they do not stray that far from those areas. Founders in the said markets will now who smaller list of players are.
- So, in case you are founder looking for best investor in the said geography, you have to focus on funds that lead rounds and do so in various major metros. You can further set the bat quite low for that, which will include funds that led rounds in around two different geographies in past 18 months. That number will end up with 50 firms. Of the said numbers, the firms are divided under multiple geographies.
You need to be sure of the notion involved in this sector before coming to the best response. The more you research, the better options you are subject to come across over here.